September 1, 2011

 

Asia's September soy prices may touch US$15/bushel

 

 

Soy prices in Asia is expected to increase next month as a result of an abrupt lower output in the US and China, trade participants said Wednesday (Aug 31).

 

Most traders expect prices to test US$15 a bushel shortly after September 12, after the USDA issues its monthly supply-demand report.

 

At 0523 GMT, the most active November CBOT soy contract was trading US$0.02 lower at US$0.1455.

 

"There may be profit taking at regular intervals but the overall outlook is bullish," a Singapore-based executive with a global commodities trading company said.

 

A fall in soy output in China and the US will push prices higher, a trader in Tokyo said.

 

Unfavourably hot and dry weather has reduced soy yield prospects in the US and acreage is also slightly lower, the International Grains Council said in its latest report.

 

This will result in an 8.2% decline in the country's output to a three-year low of 83.2 million tonnes, IGC said.

 

US soy exports in the marketing year that begins October 1 may fall 6.5% to 38.1 million tonnes, while soymeal exports may fall 5% to 7.8 million tonnes due to lower bean availability for crushing, IGC noted.

 

In anticipation of higher prices, investors are already setting up long positions on the CBOT.

 

Net speculative longs in soy more than doubled to 117,000 contracts in the week ending Aug. 23 and now constitute 16% of the open interest, the highest since February, ANZ Banking Group said in a research note.

 

IGC said Chinese soy production may fall 11.2% to 13.5 million tonnes in 2011-12 due to lower acreage as growers have switched to corn due to high prices.

 

Lower output may boost imports by 6.7% to a record 56 million tonnes, it said.

 

Analysts said the country's soy imports may rise even more if earnings from crushing beans improve from low levels now.

 

Crushers' margins depend on the import price of beans and also the state-guided sale price of oil. In China, the government partially controls the retail price of soyoil to rein in inflation.

 

Soy and soymeal demand is also strong in the EU as the region's rapeseed production will likely fall by around 7% in 2011-12 due to dry weather.

 

IGC has forecast EU's soymeal imports will hit a four-year high of 23.6 million tonnes in the marketing year that begins October 1.